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Volume 17
n
Number 2
n
Winter 2006
n
5
Anatolia: An International Journal of Tourism and Hospitality Research
Volume 17, Number 2, pp. xx-xx. 2006
Copyright © 2006 anatolia
Printed in Turkey. All rights reserved
1303-2917/06 $20.00 + 0.00
Contribution of Tourism to Economic Growth:
A Panel Data Approach
ABSTRACT
Tourism is one of the fastest growing sectors of the world economy. Tourism development may promote
economic growth both directly and indirectly, first by stimulating the growth of other sectors and second by
increasing domestic incomes and effective demand. The commonly accepted argument on the contribution
of tourism in economic growth needs to be verified empirically as well. This paper empirically investigates
whether the tourism led-growth hypothesis holds for the Mediterranean countries for the period of 1987-
2002. A panel data approach is utilized and coefficient estimates are obtained by using fixed effect and
random effect models. As a result, the hypothesis that tourism is conducive to economic growth is verified
based on the regression results. On the whole, the empirical findings reveal that traditional factors (capital
and labor) as well as a tourism related factor contribute to economic growth for the Mediterranean coun-
tries under focus.
Key words:
Economic growth, Panel data approach, Mediterranean countries.
Ummuhan Gökoval
ı is a faculty member in the Faculty of Business Administration and Economics, Mugla Univer-
sity, Turkey. She obtained her undergraduate degree in Economics from Ankara University, Turkey (1992). She
holds a Masters degree in Economics from Oklohoma State University, USA (1996) and a PhD degree from METU,
Turkey (2003). She is specialised on IPRs, economics of innovation, and economic growth/development.
Ozan Bahar
is a faculty member in the Faculty of Business Administration and Economics, Mugla University, Tur-
key. He obtained his undergraduate degree from the Military Academy (1992). He holds both Masters (2000) and
PhD (2005) degrees in Economics from Mugla University. His area of interest includes international economics,
regional development, tourism economics, and competitiveness.
UMMUHAN GÖKOVALI
UMMUHAN GÖKOVALI
Mugla University
Faculty of Economics and Administrative Sciences
Department of Economics
48170 Kötekli, Mugla
Turkey
E-mail:
ummuhan@mu.edu.tr
OZAN BAHAR
Mugla University
Faculty of Economics and Administrative Sciences
Department of Economics
48170 Kötekli, Mugla
Turkey
E-mail:
obahar@mu.edu.tr
2
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Anatolia: An International Journal of Tourism and Hospitality Research
Contribution of Tourism to Economic Growth: A Panel Data Approach
INTRODUCTION
Volume 17
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Number 2
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Ummuhan Gökoval - Ozan Bahar
Table 1.
Countries
Countries
Countries
Countries Countries
Tourism Receipts (Billion $)
Tourism Receipts (Billion $)
Tourism Receipts (Billion $) Tourism Receipts (Billion $)
Tourist Arrivals (Billion)
Tourist Arrivals (Billion)
Tourist Arrivals (Billion) Tourist Arrivals (Billion)
GDP Growth
GDP Growth
GDP Growth
(annual %)
1987
1990
1995
2000
2003
1987
1990
1995
2000
2003
1987
2003
Albania
-
0,070
0,070
0,389
0,522
-
0,030
0,040
0,032
0,041
-8
6
Algeria
0,100
0,064
0,032
0,096
0,161
0,778
1,137
0,520
0,866
1,166
-1
7
Croatia
1,668
2,774
1,511
2,758
6,376
8,907
7,880
1,485
5,831
7,409
-
-
Cyprus
0,666
1,258
2,020
2,134
2,243
0,949
1,561
2,100
2,686
2,303
7
4
Egypt
1,586
1,994
2,950
4,657
4,704
1,671
2,411
2,871
5,116
5,746
3
3
France
11,870
20,185
31,300
30,981
37,038
36,974
52,497
60,033
77,190
75,048
3
0
Gibraltar
-
-
-
-
-
0,123
0,132
-
-
-
-
-
Greece
2,268
2,587
4,180
9,262
10,842
7,564
8,873
10,130
13,096
13,969
-2
4
Israel
1,342
1,382
3,490
4,571
2,379
1,379
1,063
2,215
2,417
1,063
7
1
Italy
12,174
20,016
30,400
27,493
31,222
25,749
26,679
31,052
41,181
39,604
3
0
Libya
0,003
0,006
0,004
0,097
0,079
0,097
0,096
0,056
0,174
0,142
-
-
Malta
0,327
0,495
0,818
0,754
0,856
0,746
0,872
1,116
1,216
1,127
4
-2
Monaco
-
-
-
-
-
0,214
0,245
0,233
0,300
0,235
-
-
Morocco
0,936
1,259
1,470
2,284
3,369
2,248
4,024
2,602
4,240
4,552
-3
5
Portugal
2,145
3,555
5,650
6,027
7,886
6,102
8,020
9,511
12,097
11,707
6
-1
Spain
14,760
18,593
27,500
33,833
45,967
32,900
37,441
34,920
47,898
51,830
6
2
Syrian
0,204
0,300
1,338
1,082
1,147
0,493
0,562
0,815
1,416
2,788
2
3
Tunisia
Tunisia
0,672
0,953
1,840
1,977
1,935
1,875
3,204
4,120
5,058
5,114
7
6
Turkey
Turkey
1,721
3,308
4,957
7,636
13,203
2,468
4,799
7,083
9,586
13,341
9
6
Mediterranean
52,4
78,7
119,5
136,0
169,9
131,2
161,5
170,9
230,4
237,1
-
World
172
269
401
475
523
360
451
564
686
691
-
Share (%)
30.4
29.2
29.8
28.6
32.4
36.4
35.8
30.3
33.5
34.3
-
Source:
4
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Anatolia: An International Journal of Tourism and Hospitality Research
Contribution of Tourism to Economic Growth: A Panel Data Approach
LITERATURE REVIEW
Volume 17
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Number 2
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Winter 2006
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Ummuhan Gökoval - Ozan Bahar
MODEL AND DATA SET
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Anatolia: An International Journal of Tourism and Hospitality Research
Contribution of Tourism to Economic Growth: A Panel Data Approach
Table 2.
Study Data Set Dependent
Variable
Technique Independent
Variables
Conclusion
Martin, Morales
and Scarpa
(2004)
Time series
1985-98 for 21
Latin American
countries
GDP per capita Panel data Rate of growth of
tourists per
capita, gross
domestic
investment, public
spending on
education,
general
government
consumption
Support for the
hypothesis
Oh (2005) Time series
1975-2001 for
Korean
Real GDP ADF tests for
cointegration,
F-test for
Granger
causality in
VAR model
Real aggregate
tourism receipts
Rejection of the
hypothesis
Durbarry
(2004)
Time series
1970-1999 for
Mauritius
Real GDP OLS Physical capital,
human capital,
real tourism
receipts per
tourist and real
export
Support for the
hypothesis
Balaguer and
Jorda
(2002)
Time series
1975-97 for
Spain
Real gross
domestic
product
ADF tests for
cointegration,
F-test for
Granger
causality in
VAR model
International
tourism earnings
and real effective
exchange
Support for the
hypothesis
Campos and
Sequeira
(2005)
Time series
1980-99 for
509
observations
Growth rate of
per capita GDP
Panel data Tourist arrivals,
tourism returns
(%) and tourism
returns (USD)
Rejection of the
hypothesis
Modeste
(1995)
Time series
and cross-
section 1981-
92 and 1975-
92, 4
Caribbean
countries
Growth in per
capita GDP
OLS with
dummy
variables
(LSDV)
Growth in tourism
output per head
Support for the
hypothesis
Brau, Lanza
and Pigliaru
(2003)
Time series
1980-1995 for
14 small
countries within
a sample of
143 countries
Average annual
real per capita
GDP growth
OLS cross-
country
Per capita GDP
1980, share of
trade in GDP
1980-95,
standard
deviation of
growth rates
1980-95 and
average share of
tourism receipts
in GDP 1980-95
Support for the
hypothesis
Yıldırım and
Öcal (2004)
Time series
1962-2002 for
Turkey
GNP VAR model Real tourism
revenues, real
savings to proxy
for investment
and labor force
Support for the
hypothesis
Source:
Volume 17
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Ummuhan Gökoval - Ozan Bahar
Estimation Techniques
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Anatolia: An International Journal of Tourism and Hospitality Research
Contribution of Tourism to Economic Growth: A Panel Data Approach
Estimation Results
Volume 17
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Ummuhan Gökoval - Ozan Bahar
Table 3.
Variables
OLS Levels
OLS Levels
Fixed Effects
Fixed Effects
Random Effects
Random Effects
GFCFGDP
0.129
0.21
0.149
(0.063)**
(0.078)**
(0.066)**
GLF
0.328
0.631
0.34
(0.169)*
(0.5)
(0.2)*
TOUEX
TOUEX
0.066
0.083
0.065
(0.03)**
(0.062)
(0.034)*
F Tests
5.7 (3, 204)**
2.36 (15, 192)**
2.361 (15, 192)**
Hausman test
3.18
AR(1)
-2.646**
-3.792**
-3.021**
AR(2)
2.479**
1.606
2.211
Notes:
Table 4.
Variables
OLS Levels
OLS Levels
Fixed Effects
Fixed Effects
Random Effects
Random Effects
GFCFGDP
0.124
0.214
0.132
(0.064)*
(0.079)**
(0.065)**
GLF
0.373
0.735
0.377
(0.171)**
(0.522)
(0.179)**
TOUEX
TOUEX
0.082
0.15
0.082
(0.032)**
(0.072)**
(0.033)**
F Tests
6.78 (3, 191)**
2.47 (15, 179)**
2.472 (15, 179)**
Hausman test
5.54
Notes:
10
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Anatolia: An International Journal of Tourism and Hospitality Research
Contribution of Tourism to Economic Growth: A Panel Data Approach
CONCLUSIONS AND IMPLICATIONS
Volume 17
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Ummuhan Gökoval - Ozan Bahar
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12
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Anatolia: An International Journal of Tourism and Hospitality Research
Contribution of Tourism to Economic Growth: A Panel Data Approach
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Volume 17
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Number 2
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Winter 2006
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Submi� ed
: 05 January 2006
Resubmi� ed
:
06 April 2006
Resubmi� ed
:
24 April 2006
Accepted
:
02 May 2006
Refereed anonymously
